Your commute costs me how much? Really?

In civilization, civil society, people — in some form or another — subsidize each other, give each other assistance. In modern capitalist societies, those subsidies are almost always measured in direct cash transfers with little attention, understanding, or incorporation of indirect (whether financial or otherwise) resource transfers and subsidies. For the energy/climate world, for example, the key to this are ‘externalities’ related to fossil fuel exploitation: that impacts health, economy, and security directly (like mercury impacts on brain development, particulates that cause cancers/asthma) and indirectly (CO2 driving climate change as most direct). While gasoline might only cost a few dollars per gallon at the pump, in the United States, a true accounting of all the costs (from providing security to oil movements to land impacts to health to …) typically puts the true per cost to society anywhere from $8 to >$15 gallon.

Few people, when they hop in the car to go to the mall, consider their own fully-burdened costs of driving (insurance, repairs, amortization of the purchase price, the value of their home’s parking spot, …) let alone incorporating in the externalities associated with burning fossil fuel. In fact, driving to the Mall costs us — and society — far more than we realize.

Although these costs are easy to overlook, that doesn’t make them any less real. Sometimes we pay them up front, other times indirectly. But, at the end of the day, we still pay them, so we should consider them in our calculus when making big decisions.

That is a point made by George Poulos, a transportation engineer and planner, discussing a calculator developed in Vancouver, BC, that seeks to assess the full cost of a commute amid a debate over how to finance public transportation. When it comes to public transportation, there is a pretty good old adage: a passenger train running a profit is charging too much. Why? Because so many of the quite real costs AND benefits are not accounted for in the accounting process that determines a profit. People riding trains into a city mean fewer people on the road which means faster driving — shouldn’t the rail passenger be ‘credited’ with drivers’ time savings? That sort of calculation and valuation is just what the Cost of Commute Calculator seeks to account for in helping inform public discussion of and decision-making about transportation system options.

As per the graph in this tweet, try to consider the subsidy inherent in commuting options. If you walk, society has built the side-walk, there are police officers, etc … There is a ‘subsidy’ to burning shoe-leather which, according to the calculator, is somewhere in the range of 1% of your own cost. When you drive, that subsidy balance is really thrown a loop. If driving costs you $1 (under two miles driving according to the $0.535 per mile 2017 IRS rate), the societal subsidy — building roads, emergency services, pollution (noise, air, etc) — is $9.20.

To provide a context, the average US commute is about 15 miles each way — or 30 miles/day. While an ‘average’ driver might think that their daily commute ‘costs’ perhaps $3 in gas, the IRS calculation comes to $16.05, the Cost of Commuting calculation (in the Vancouver Metro area) would put the total societal cost at $276.

What does a commute cost you? What does it cost society?

Honestly, I am somewhat of a ‘total ownership cost (TOC)’, ‘life-cycle cost’ (LCC), full-cost accounting geek — truly seeing how achieving a broader understanding of costs and benefits can enable more informed and better decision-making. Within that context, this floored me … $9.20 in subsidy per mile …

Think about that … $276 in societal costs day in, day out for the average single-passenger commuter. Now do you understand why the post is titled:

Your commute costs me how much?

Really?

One of the oldest analytical adages is ‘all models are wrong but some models are useful.’ Truth be told, full-cost accounting is difficult and often imprecisely over-precise. How much should the ‘system’ value a 10 minute wait for a subway car? For a student, a parent rushing home to pick up children from daycare (facing a potential fee if late), for someone billing time, …? And, how about if this is an unexpected delay and additional time that makes the student late to school, the parent late for picking up the child from daycare, and the worker late for that critical client meeting? How about noise pollution valuation? Etc … etc … etc … Okay, so that $9.20 per mile subsidy almost certainly isn’t $9.20 exactly and could, as per trying to calculate the ‘true cost of a gallon of gas’, vary significantly dependent on how one calculates various imputes. The precise figure is almost certainly wrong even as it is incredibly useul.

Full-cost accounting efforts are, however, extremely useful for assisting decision-making. If one operates far from gas stations (think, for example, like a military in Afghanistan), planing equipment acquisition based on the commodity cost of fuel (what the gallon cost to buy) versus the fully-burdened cost of fuel (FBCF — what it cost to buy and deliver the fuel to the end user) will lead to under-valuing end-use energy efficiency. Similarly, focusing solely on the dollar transaction in transportation discussions, planning, and investment decision-making will sub-optimize decisions and, writ large, under-value public transportation and walkability-friendly investments in favor of (almost uniformly) more polluting and less societal friendly transportation.

Adam Siegel is impassioned about understanding and explaining the complex intersection of energy, environmental, business, national security, policy, and social issues. He looks at challenges and opportunities from a systems perspective. His home blogging site is Get Energy Smart! NOW! (http://getenergysmartnow.com).